Nhulunbuy wary of latest gas deal, MP says

By Xavier La Canna

The local MP for the mining town of Nhulunbuy says locals are still worried about the region's future, despite a meeting yesterday where more gas was promised for a mining company to continue operating.

Labor MP Lynne Walker who represents Nhulunbuy said a town meeting on Monday with Federal Resources Minister Ian Macfarlane did not allay fears from residents worried the Gove alumina refinery may close.

The refinery is the economic lifeblood of Nhulunbuy, a town of about 4000, and most families are employed locally or at the associated bauxite mine.

"Whilst we welcome that news and the fact that he made the effort to travel all the way here, there still remains an awful lot of uncertainty around it," Mr Walker told the ABC.

Rio Tinto, which owns the refinery, says the high Australian dollar, the low price of alumina and the fact that the refinery runs on expensive diesel fuel, means the operation is losing money.

Via its subsidiary Pacific Aluminium the miner has warned that unless it gets access to natural gas to run the refinery it may close, or see production curtailed.

At yesterday's meeting, which was also attended by NT Chief Minister Adam Giles, Mr Macfarlane said the 300 petajoules of gas Rio Tinto has asked for to keep the refinery open would be made available.

"There was no round of applause, there was no standing ovation when the minister announced that he had found 300PJ of gas and that this gas was available," Ms Walker said.

An original deal to supply the company with 300PJ of gas was torn-up by Mr Giles, who warned it would expose the NT to the risk of gas shortages in the future.

Ms Walker said questions about where the gas promised yesterday would come from remain unanswered.

"No doubt they (Rio Tinto) are going to play hardball on this and it is about how willing government is to negotiate," Ms Walker said.